Minnesota Legislation to Correct Marriage Penalties

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H.F No. 267, as introduced: 81st Legislative Session (1999-2000) Posted on 1/25/99

A bill for an act
relating to taxation; income; modifying the tax
brackets and the alternative minimum tax exemption
amount to reduce marriage penalties; amending
Minnesota Statutes 1998, sections 290.06, subdivisions
2c and 2d; and 290.091, subdivision 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. Minnesota Statutes 1998, section 290.06,
subdivision 2c, is amended to read:

Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES,
AND TRUSTS.] (a) The income taxes imposed by this chapter upon
married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be
computed by applying to their taxable net income the following
schedule of rates:

(1) On the first $19,910 $34,500, 6 percent;

(2) On all over $19,910 $34,500, but not
over $79,120 $113,360, 8 percent;

(3) On all over $79,120 $113,360, 8.5 percent.
Married individuals filing separate returns, estates, and
trusts must compute their income tax by applying the above rates
to their taxable income, except that the income brackets will be
one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried
individuals must be computed by applying to taxable net income
the following schedule of rates:

(1) On the first $13,620 $17,250, 6 percent;

(2) On all over $13,620 $17,250, but not
over $44,750 $56,680, 8 percent;

(3) On all over $44,750 $56,680, 8.5 percent.

(c) The income taxes imposed by this chapter upon unmarried
individuals qualifying as a head of household as defined in
section 2(b) of the Internal Revenue Code must be computed by
applying to taxable net income the following schedule of rates:

(1) On the first $16,770 $21,240, 6 percent;

(2) On all over $16,770 $21,240, but not
over $67,390 $85,350, 8 percent;

(3) On all over $67,390 $85,350, 8.5 percent.

(d) In lieu of a tax computed according to the rates set
forth in this subdivision, the tax of any individual taxpayer
whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in
accordance with tables prepared and issued by the commissioner
of revenue based on income brackets of not more than $100. The
amount of tax for each bracket shall be computed at the rates
set forth in this subdivision, provided that the commissioner
may disregard a fractional part of a dollar unless it amounts to
50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the
entire year must compute the individual's Minnesota income tax
as provided in this subdivision. After the application of the
nonrefundable credits provided in this chapter, the tax
liability must then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source
federal adjusted gross income as defined in section 62 of the
Internal Revenue Code disregarding income or loss flowing from a
corporation having a valid election for the taxable year under
section 1362 of the Internal Revenue Code but which is not an
"S" corporation under section 290.9725 and increased by the
additions required under section 290.01, subdivision 19a,
clauses (1) and (9), after applying the allocation and
assignability provisions of section 290.081, clause (a), or
290.17; and

(2) the denominator is the individual's federal adjusted
gross income as defined in section 62 of the Internal Revenue
Code of 1986, increased by the amounts specified in section
290.01, subdivision 19a, clauses (1), (5), (6), (7), and (9),
and reduced by the amounts specified in section 290.01,
subdivision 19b, clauses (1), (11), and (12).

Sec. 2. Minnesota Statutes 1998, section 290.06,
subdivision 2d, is amended to read:

Subd. 2d. [INFLATION ADJUSTMENT OF BRACKETS.] (a) For
taxable years beginning after December 31, 1991 1999, the
minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed in subdivision 2c shall be adjusted for
inflation by the percentage determined under paragraph (b). For
the purpose of making the adjustment as provided in this
subdivision all of the rate brackets provided in subdivision 2c
shall be the rate brackets as they existed for taxable years
beginning after December 31, 1990 1998, and before January
1, 1992 2000. The rate applicable to any rate bracket must not
be changed. The dollar amounts setting forth the tax shall be
adjusted to reflect the changes in the rate brackets. The rate
brackets as adjusted must be rounded to the nearest $10 amount.
If the rate bracket ends in $5, it must be rounded up to the
nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and by
the percentage determined pursuant to the provisions of section
1(f) of the Internal Revenue Code, except that in section
1(f)(3)(B) the word "1990" "1999" shall be substituted for the
word "1987 1992." For 1991 2000, the commissioner shall then
determine the percent change from the 12 months ending on August
31, 1990 1999, to the 12 months ending on August 31, 1991 2000,
and in each subsequent year, from the 12 months ending on August
31, 1990 1999, to the 12 months ending on August 31 of the year
preceding the taxable year. The determination of the
commissioner pursuant to this subdivision shall not be
considered a "rule" and shall not be subject to the
Administrative Procedure Act contained in chapter 14.
No later than December 15 of each year, the commissioner
shall announce the specific percentage that will be used to
adjust the tax rate brackets.

Sec. 3. Minnesota Statutes 1998, section 290.091,
subdivision 3, is amended to read:

Subd. 3. [EXEMPTION AMOUNT.] (a) For purposes of computing
the alternative minimum tax, the initial exemption amount is the
exemption determined under section 55(d) of the Internal Revenue
Code, as amended through December 31, 1992, except that
alternative minimum taxable income as determined under this
section must be substituted in the computation of the phase out
under section 55(d)(3). equals the following amounts:

(1) for an individual who is not a married individual and
is not a surviving spouse, $30,000;

(2) for a married individual filing a separate return or an
estate or a trust, one-half of the amount determined under
clause (3) for joint returns;

(3) for an individual filing a joint return or a surviving
spouse, $60,000.

(b) The exemption amount is determined by reducing the
initial exemption amount, as determined under paragraph (a), by
25 percent of the amount of alternative minimum taxable income
of the taxpayer that exceeds:

(1) for an individual who is not a married individual and
is not a surviving spouse, $112,500;

(2) for a married individual filing a separate return or an
estate or a trust, one-half of the amount determined under
clause (3);

(3) for an individual filing a joint return or a surviving
spouse, $225,000.

Sec. 4. [EFFECTIVE DATE.]

Sections 1 and 3 are effective for taxable years beginning
after December 31, 1998. Section 2 is effective for taxable
years beginning after December 31, 1999.

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